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Is this the fall out ?? . Russell Deards, Head of Legal and Company Sec has gone.

Probably fall out from the GT debacle. Not really surprised if it is the case.

It would seem then that DX's strategy is to ask for an extension and continue to trade on the AIM if granted and the new auditors sign off the accounts. But is it... we have to take it in good faith.
don't we.

I can't believe it has taken five months to negotiate with a new auditor that just doesn't make any sense to me especially as the corporate governance issue as not been mentioned.

Getting an auditor makes any other strategic plan easier to execute and that is what I think is going on here. Gatemore made it very clear how they weren't happy with DX's share price performance expansion and capital allocation policy. To take on board sisters point is staying the AIM in its current form going to realise the value ... not on the organic strategy as we know it I don't think. That's part of my justification for thinking there is another strategy at play behind the scenes.

That’s true Pianista. But the directors shouldn’t be learning from this experience. They should know better, they are old enough and experienced enough. Platitudes about corporate governance are plastered all over their website that they haven’t followed. The directors are tarnished by this experience and fact they have now appointed an auditor shouldn’t gloss over that fact.

Yes, Pianista.. it's massive in terms that it is essential to move forward. But it doesn't answer any of the serious questions hanging over DX and that's what I mean.There is no clarity.

Five months ago auditors resigned over concerns over executive conduct and possible breaches of law. Now we just appoint an auditor. That's alright then !!!... all is rosy in the garden.

What is going to affect the value of our investment is DX's strategy now Meidar is involved. That's the watch on the assumption we get our extension, suspension lifted, and accounts audited.

I still think there is some fundamental news to come out and I personally don't think its a case as Liam Gallagher would say. of .. "as you were"

A crumb of comfort but for me it raises more questions than answers. It makes the possibility of an extension , the lifting of the AIM suspension more likely and the ability to buy and sell shares easier but there are no guarantees.

But what's changed..why now... why has it taken five months.?
Whats happened to the corporate governance inquiry ?
They've appointed a relatively small auditor.. the big players with the bigger resources are no where near it, it seems.

Let's hope these auditors don't resign once they've got their feet under the table. Who Nows. They shouldn't do but DX are not known for transparency.

The picture is still very murky. Will we get the new depot openings announced before the beginning of July. Has the Meidars review been done, what will it result in.. what is strategy moving forward. How is trade?

I am just hoping the shares get relisted on the AIM and I have the opportunity to sell depending on the news flow and the thoughts of ATPM etc are still valid as regards strategy. It doesn't actually change anything.

It doesn't really change any concerns I have and I'm expecting plenty of news in the next six months.
Again DX have told us the bare minimum and with Meidar involved any form of news wouldn't surprise me. I don't think Pi's can breathe easily just yet. !

ATPM. You are right that that we both sit at different ends of the sector which will frame our view and thinking but I have learnt something from you.

There may be some confusion over express. As I understand it DX express comprises two divisions. DX secure which I used and DX courier. Exchange and mail is a separate division but is incorporated into Express for the purposes of the figures. Last year in express parcels (courier/secure turnover was £119m and Exchange and mail 40M. Profitability was substantially down although there was a 30% increase in parcels. They don't break the profitability down but its quite obvious parcels is not currently that profitable.

I read somewhere that Evri are moving into IDW and no doubt if they are they will be throwing plenty of money and resources at it.Someone said that DX may end up getting squeezed and I see that view. My view is that Dx have to get ahead of the game to maintain and increase their value and M&A is the best way for them to that.But that costs a lot. If they maintain the organic route they are just going to get left behind and as someone said if DX are an attractive proposition someone would have swooped by now. But who knows what's going on. !!

I know Wincanton are not a competitor in express. I explained that in my post. Dx have said themselves that Wincanton is their competitor in 2 man freight and logistics. I agree with all the differences between IDW and Express and you obviously have knowledge. My real point is that they seem to want to expand in express and not fully exploit the obvious opportunity's in IDW and Freight which they are more geared up for.

I understand IDW would be considered niche but standard parcels I don't agree.They went after me quite proactively, they didn't offer anything unique apart from being different and talking a good game in customer service that they couldn't back up although there were covid implications.

FJ and APTM. I think you misunderstand my point. I am fully aware of Freight, Express, IDW or whatever and the logistical implications. Dx is not a niche business but it depends on your interpretation in niche terms of markets, services or customers.They offer niche services but so do others. Dx currently are trying to cover a lot of bases and that is very rarely a recipe for success in any business unless they a massive operation in terms of resources, personnel ,finance etc. DX are certainly not that.

On a personal note I send boxed parcels UK and world worldwide varying in size from 1 to 15Kg (62cm by 62cm by 62cm max) and Dx are not in the ball park at all in the UK for any size.. Worldwide they don't really have an offering and they effectively told me that when I took out a contract.

The stem miles I was talking about related to express in relation to their collection service many being self employed drivers. It can't be viable.

IDW is a different beast and I am fully aware of that. Dx have said they have about 15% of the one man freight business with Tuffnells at 15%, TNT(Now Fed Ex) at 15%. So there is 2 other competitors in freight and I'm sure Fed Ex will be wanting to grow that.They have 4% of 2 man freight and logistics compared to 20% Wincanton. Why aren't they focussing on those rather than faffing about trying to take market share from DPD, UPS et all because they have no chance.

Well FJ, I was using DX last year for our business and I assure you they don't provide a service that is any different in express than Royal Mal, DPD, UPS et al. I made those points on this board last year.They are more expensive than anyone else, the don't use access points so their stem miles are far greater as they use a collection only service. I only used them because I have an interest. The 2 hour window ETA set up in 2020 wasn't operational then probably because of covid implications I don't think even now that works well and others do that now so its not unique. I've stopped using them now. They have been recruiting dedicated depot sales managers in DXE which says a lot but as far as I am concerned DX don't offer a service any different in express. If I want to send a 2Kg (less than a metre)Parcel to another UK address on a next day I can pay £4.43 with Evri, £6.09 with UPS, or £8.19 with DX. Even with the discount it wasn't competitive with the same levels of protection. There is in my opinion nothing niche about that. Document exchange yes... but not parcels.

FJ. I would take your point on this if DX hadn't invested so heavily in infrastructure and human resources in express. That isn't a niche business, it's mass market and ridiculously competitive.

It makes far greater business sense to commit to freight. So why haven't they. I don't buy the argument that i's just an add on to entice freight customers. The investment and planned investment including a major hub just doesn't point to that. If you don't want to compete with the big players why on earth would you invest in express when you don't have the coverage/infrastructure to provide the service anything like as competitive and comparable to the competitors. They have 1% to 2% of the parcels market.

Dx currently are not a niche business, they are spreading their net very wide.

That's why I see some restructuring.

Lloyd proudly spouts platitudes on the website of being the best. But it's simply not possible, it makes no sense in a price driven business. You're either the cheapest or second cheapest, there is nothing to be gained by being further down the list unless you have very deep pockets.

Regardless of how the legal status of the company may change or the ownership it boils down to the business plan which in my opinion is now floored in the current climate and I think that was intimated by Gatemore in the announced review of the growth/expansion strategy and their consideration of strategic alternatives.

"It may be (just an idea) if an MBO were to happen, certain II's retain their shareholdings having been sold a vision"

What vision could that be ATPM bearing in mind what we know about the Macro and Micro economy. A fanciful one or a realistic one.!

If we are looking at a sale in the future, how are DX going to get to a position where people are clamouring at their door?

Interesting points this morning.

Whether we get a rather late extension and continue to trade on on the AIM perhaps September or October or trade on the OTC we'll get nothing like 30p per share. The Makro and Micro economic picture is very uncertain. Gatemore complained that Dx were getting nowhere near analysts targets of 45p+ I can't see any scenario that we get anywhere near that.

So where is the demand/interest going to come from not only for the shares, but the business and investing in or financing a very small in the logistics business that has made negligible inroads in the express courier business and an uncertain exchange business and its only really freight that is worth anything to anyone. Whether that be Lloyd or anyone else

I don't get the desire to take it private in the early stages of profitability in this sector. That doesn't make sense. I can't see where the finance is coming from when there are question marks over executive conduct.. It really depends on the exit strategy, Lloyd is 63 and as I have said before he is not in control of the situation. The institutional shareholders are holding all the cards having around 60% of the company combined.

However this plays out I don't think going solo is the way forward for DX. DX on the current strategy will need enormous amounts of money, they're not generating enough to compete with the big players who are betting bigger and it's only tough times ahead for the business in the foreseeable economic climate.

I suppose what I'm really saying is that I can't see the attraction of DX at the moment either to take private or as an investment/finance opportunity because ultimately it depends on profitability and success of the day to day operations and I can't see a clear positive picture.

:-)
To be honest Pianista I'm getting to the stage where I'd be quite suspicious if they announced an auditor now certainly without any information about the conclusion of corporate governance issue and a full explanation. Almost as if the situation has been engineered some how right at the death but I can't think why. I'd welcome it ofcourse but I wouldn't be comfortable, there is something not right here.

Hopefully we'll know more shortly and I'll have a long awaited lightbulb moment !!

We do ATPM. I'm actually quite looking forward to the next RNS, hopefully a strategy will become clear. If the intention is to go private then they must see it as more beneficial to themselves, the business and shareholders than remaining on the AIM. If the plan is to change the legal status to a private rather than quasi private then virtually all the ii's would need to be onboard. Bearing in mind our discussions yesterday I can't see how that benefits unless there is a merger in the offing. Perhaps you can ?

The auditor situation is just strange.

Yes, Absolutely Pianista. That makes perfect sense but it begs the questions...

1) what have they been doing for the last four months?
2) Why haven't they got on with it ?
3) What on earth are the institutional shareholders up to ?
4) Why haven't they updated us on the corporate governance issue ?

There has to be answers to these questions ?. They have told us the bare minimum, kept their cards very close to their chest and in the absence of anything positive it just looks like we are sat here waiting for the executioners sword of the AIM. I struggle to believe that is case.

The trading update in early February was pretty positive. On the 2nd February the trading update stated that the corporate governance enquiry was ongoing and further updates would be issued in due course. Two days later it is not progressing as expediently as hoped and the NED's have gone and the auditors. As you say they have had four months to sort this out and it feels like they have done nothing. It's really hard to understand. But if we only get half the story we are not going to. !

We have to remember that DX do not recognise the points and accusations levelled at them by GT so if that's their view why should anyone resign. There obviously hasn't been the appetite by the major shareholders or other directors to remove anyone. Unless they feel their position is untenable why would they.

Dx made it clear that they were frustrated that the CG inquiry was not progressing as expediently as possible. Thats a vague word it can be interpreted as quickly or in a morally acceptable way(etc). who knows. The NED's leading the investigation went.

Despite Ron Series protestations that "The Inquiry has not proceeded as expediently as initially hoped by the Board and it remains focused on concluding the Inquiry as soon as possible." there has been no further mention of the corporate governance enquiry since that statement.

So will anyone go. I don't know. Perhaps as a result of any legal process still to be concluded maybe.!

Lets hope you are right ATPM.There is no doubt Lloyd did a good job at Tuffnells but I think people are like share prices. Past performance is no guarantee of future performance and the logistics landscape has changed quite a lot since 2015 and he has presided over a bit of mess for 7 months.

It's interesting that Fed Ex have acquired TNT and according to DX's figures TNT have about the same marketshare in I man(f) as DX. I wonder how that will pan out with all Fed Ex resources. If Dx really want to be the major player then really they need to be talking to Tuffnells, Arrow Xl, Panther etc it would seem a far easier route than organic growth.

We'll know soon enough how this is going to pan out but perhaps we could give some thought to the business/sector moving forward. DX is already a low margin business but the inflationary pressures are huge, fuel( which must be crippling for them), wage pressures together with reduction of consumer spending, continued supply chain disruption and the implications of the Ukraine war talk of a recession which seems pretty probable if we are not already in one.

Notwithstanding DX's current predicament I think trading is going to be pretty tough this calendar year. I still think we will see operational and structural changes in the business and I think a merger may be in offing. How this will affect our investment of course no one knows.

I'd agree with that Pianista. There must be something going on . The audit community must be petrified of touching anything mildly contentious. PWC have been fined £5m for audit failures regarding Galliford Try.

I'm not sure I do either !!. All you can do is apply common sense to a situation and judge the facts as we know them.

If GT's allegations have some truth in them which seems to be the case as they have failed so far to replace the auditor. Therefore, you have to look at DX's response. On the face of it all Dx have had to do get is auditor is essentially be more helpful and disclose information GT required. They chose not to do this.

They have claimed privilege which tells me they are desperate to cover something up for some reason. But is there any point in that now. People talk and those who want to know probably know by now.

So is DX's strategy sensible... I can't see it!. That really is the point I am making. If someone can tell me why a strategy to allow a forcible delisting is good for business, shareholders and the reputation of the board of directors please do when a voluntary delisting was an option. I take you point that it doesn't make much difference due to bad publicity which will be well known but it doesn't make sense to make things worse. I can only assume there isn't full agreement.

You are right that DX do need to move position but why haven't they and why should they in the future. Surely they would have taken legal advice end of last year/early this, that legal advice wouldn't change. If they are acting on legal advice then they won't change position. They would have probably pursued it through a legal process against GT for resigning without reason etc, etc but they haven't. !. That's all beyond me.

I can't imagine Meidar has been in post for 6 months twiddling his thumbs waiting for a corporate governance inquiry to be completed and we don't actually know if it has been completed or is in fact still going on.

Nobody knows what's going on behind the scenes and Dx are saying as you say, but on what Dx are telling us which is next to nothing, what we know and can deduce none of it makes any sense to me.

There is enough brains in that company to sort this out so let's hope they can even if it is right at the death.